Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS

Division 328 - Small business entities

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Subdivision 328-G - Restructures of small businesses

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History

Subdiv 328-G inserted by No 18 of 2016, s 3 and Sch 1 item 1, applicable to:

(a) the transfer of a depreciating asset if the balancing adjustment event arising from the transfer occurs on or after 1 July 2016; or

(b) the transfer of trading stock or a revenue asset if the transfer occurs on or after 1 July 2016; or

(c) the transfer of a CGT asset (other than a depreciating asset, trading stock or a revenue asset) if the CGT event arising from the transfer occurs on or after 1 July 2016.

Former Subdiv 328-G repealed by No 80 of 2007, s 3 and Sch 3 item 86, applicable in relation to the 2007-08 income year and later income years. Subdiv 328-G formerly read:

Subdivision 328-G - Entering and leaving the STS
SECTION 328-430 What this Subdivision is about

Eligible taxpayers have a choice as to whether to enter the STS.

The rules for entering and leaving the STS are set out in this Subdivision.

Operative provisions
SECTION 328-435 Entering the STS
328-435
You are an STS taxpayer for an income year if:

(a) you are eligible to be an *STS taxpayer for that year (see Subdivision 328-F); and

(b) you notify the Commissioner, in the *approved form, of your choice to become such a taxpayer for that year. SECTION 328-440 Leaving the STS
328-440(1)
You continue to be an STS taxpayer for each later income year unless:

(a) you notify the Commissioner, in the ^* approved form, of your choice to stop being an STS taxpayer; or

(b) you are not eligible to be an STS taxpayer for that later year (see Subdivision 328-F).

328-440(2)
If you are not eligible to be an STS taxpayer for that later year, you must notify the Commissioner, in the *approved form, of that fact.

Restriction on re-entry

328-440(3)
If you choose to stop being an *STS taxpayer, you cannot again become an STS taxpayer until at least 5 years after the income year that you left the STS.
Note:

If you stop being an STS taxpayer because of increased turnover or because of the value of your depreciating assets, you can become an STS taxpayer for an income year again as soon as you are eligible.

Former Subdiv 328-G inserted by No 78 of 2001.

Requirements for a roll-over under this Subdivision

SECTION 328-430 When a roll-over is available

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328-430(1)
A roll-over under this Subdivision is available in relation to an asset that, under a transaction, an entity (the transferor ) transfers to one or more other entities ( transferees ) if:

(a) the transaction is, or is a part of, a genuine restructure of an ongoing *business; and

(b) each party to the transfer is an entity to which any one or more of the following applies:

(i) it is a *small business entity for the income year during which the transfer occurred;

(ii) it has an *affiliate that is a small business entity for that income year;

(iii) it is *connected with an entity that is a small business entity for that income year;

(iv) it is a partner in a partnership that is a small business entity for that income year; and

(c) the transaction does not have the effect of materially changing:

(i) which individual has, or which individuals have, the ultimate economic ownership of the asset; and

(ii) if there is more than one such individual - each such individual ' s share of that ultimate economic ownership; and

(d) the asset is a *CGT asset (other than a *depreciating asset) that is, at the time the transfer takes effect:

(i) if subparagraph (b)(i) applies - an *active asset; or

(ii) if subparagraph (b)(ii) or (iii) applies - an active asset in relation to which subsection 152-10(1A) is satisfied in that income year, or would be satisfied in that income year if paragraph 152-10(1AA)(b) were disregarded; or

(iii) if subparagraph (b)(iv) applies - an active asset and an interest in an asset of the partnership referred to in that subparagraph; and

(e) the transferor and each transferee meet the residency requirement in section 328-445 for an entity; and

(f) the transferor and each transferee choose to apply a roll-over under this Subdivision in relation to the assets transferred under the transaction.

Note:

The roll-over of a depreciating asset transferred in the restructuring of a small business is addressed in item 8 of the table in subsection 40-340(1) .

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328-430(2)
However, a roll-over under this Subdivision is not available if the transferor, or any transferee, is either an *exempt entity or a *complying superannuation entity.

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Commissioner ' s Remedial Power

Note: A Commissioner ' s Remedial Power (CRP 2017/2) is relevant to this part of the tax law. Taxation Administration (Remedial Power - Small Business Restructure Roll-over) Determination 2017 (F2017L01687) modifies the operation of s 40-340 of the Income Tax Assessment Act 1997 and any other provisions of a taxation law whose operation is affected by the modified operation of s 40-340 in relation to an asset transferred under a small business restructure roll-over (item 8 of the table in s 40-340(1) ).

The operation of the relevant provisions is modified as follows:

If s 40-340 of ITAA 1997 provides for roll-over relief in relation to a disposal of a depreciating asset because the condition in item 8 of the table in s 40-340(1) of ITAA 1997 is satisfied in relation to the asset, that section has effect as if it also provided that the disposal of the asset has no direct consequences under the income tax law (other than Div 40 of ITAA 1997).

The modification applies in respect of transfers on or after 8 May 2018.

An entity must treat a modification as not applying to it or any other entity if the modification would produce a less favourable result for it. The Commissioner is empowered by s 370-5 of Sch 1 to the Taxation Administration Act 1953 to make modifications, by legislative instrument, to ensure the law is administered to achieve its intended purpose or object.

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